Birmingham's new Dome or Doom?

While doing some thinking about the Magic City's newest grand idea of doubling business license fees and increasing taxes to build a dome, I recalled a policy paper I read in graduate school concerning the economic impact of domes and professional sports teams. The paper I am relying on is, "The Economics of Stadiums, Teams, and Cities" by Andrew Zimbalist. It isn't the exact same situation as Birmingham but some of the findings can be transferred. The journal can be downloaded here and a summary can be read here. The words of the author:

"It is a common perception that sports teams have an economic impact on a city that is tantamount to their cultural impact. This is wrong. In most circumstances, sports teams have a small positive economic effect, similar perhaps to the influence of a new department store."

1. Individual sports teams are not big business. The average NFL team in 1994 grossed $65 million. Compared to the 1993 Effective Buying Income of $21.1 billion for metropolitan St.Louis. The gross of an NFL team would just account for 0.3% of St. Louis's EBI, 0.6% of Jacksonville, Florida, and 0.05 of the EBI of New York City.
2. Studies have shown that most public stadiums do not cover their own fixed and operating costs. Quirk & Fort estimated an average public stadium subsidy (net fiscal cost) of $6.8 million and conservatively projected in excess of $500 million in government subsidies to all professional sports teams in the same year. Operating and debt service deficits mean that city or state governments will have to levy additional taxes. Higher taxes in turn, discourage business in the area and reduce customer expenditures, setting off a negative multiplier effect.
3. Virtually all independent economic research has confirmed a diminutive or negligible economic effect from the relocation of a sports team in a city. For instance, Baade and Dye looked at nine cities over the period 1965-83 and found that no significant relationship between adding a sports team or a new stadium and the city's economic growth. In fact, they found that in 7 out of the 9 cities, the city's share of regional income declined after the addition of a new sports team or the construction of a new stadium. Baade recently updated this study to include 36 areas over a 30 year period and found that in no cases did a new stadium have a statistically significant, positive economic impact on the city's growth and in 3 cases it had a negative impact. Arthur Johnson studies 15 cities that host minor league baseball teams and concluded that:"The economic impact of a minor league baseball team is not sufficient to justify the relatively large public expenditure necessary for a minor league baseball team."

TO BE CONTINUED